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Complaint 36 of 36 in "Claim Denied or Delayed"

Insurance Carrier: State Farm
State: New Mexico

Consumer Complaint:

My daughter purchased a new motorcycle on a monthly payment plan. She purchased the insurance believing it would cover everything in case of an accident. (Full coverage) She and another friend were involved in a M/C car accident. The insurance company now indicated she did not have full coverage. The M/C was totaled and she still owed $$$$$. Even the insurance lady in the claims dept indicated this was not normal since the M/C had a loan against it. Is it legal to furnish just partial coverage when the insuance company is aware the M/C has a loan on it? Is there any recourse for this?

Insurance Expert Answer:

It is a hard course but not hopeless, although there are a series of issues she'd have to overcome.

First, what do you mean by "full coverage"? -- that term can have multiple meanings. Liability? Sure, it's required by law. Fire and Theft? Sure, as the lender demands it. Collision? Probably as the lender demands it. Coverage to forgive the difference between what she might owe and the then current value of the bike? Doubtful.

Second, what did she say she wanted to buy and who did she buy it from? If she went to an agent and told the agent she did not want to spend any more than the absolute minimum, and the agent suggested something and she said "no" then she has no claim. Even if she says she says yes and the agent says she said no, it's a "she said, he said" situation.

Third, she got the policy and it says what it covers, and if she did not read it (yes, I know they are hard to read much less understand) in many situations she'd be out of luck.

Fourth, if the finance company got the coverage sheet and was satisfied, that's all that was needed. If the finance company raised issues what she then did would be significant.